Case Type:
Case Status:
Affirmed in part and Reversed in part
21-1143 (9th Circuit, Jan 24,2022) Not Published
The U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP): (1) affirmed the denial by the U.S. Bankruptcy Court for the Central District of California (BC) of a motion to reopen a dormant case by Gregory Bosse (Bosse), the lawyer for that case's joint debtors (DRs), as reopening is not required when a party "merely" seeks an order's reconsideration, not, like the BC, due to Bosse's failure to explain his error or a basis for his request; (2) reversed the BC's denial "with prejudice," as the "ministerial step of reopening" requires no support; and (3) denied one DR's motion for sanctions.
Procedural context:
In the summer or fall of 2020, months after Kenya Ruiz (Ms. Ruiz) had won an state court order vacating a prior judgment, Bosse filed his first motion to reopen the original bankruptcy case of Ms. Ruiz and her then-husband, Ruben Ruiz (Mr. Ruiz), first filed in June 2009 as a chapter 13 case and closed, after a discharge, as a chapter 7 case in September 2010. The BC court promptly informed Bosse that he needed to re-file the motion using the correct form. Two months later, he did so, this time joined by Ms. Ruiz, who supported this effort in the hope of winning disgorgement and sanctions against Bosse for his postpetition collection of legal fees outside the BC's purview. Naturally, such sanctions motion followed. The BC granted Bosse's amended first motion and set these punitive filings for a hearing. Inexplicably, Bosse never opposed these motions; thus, the BC granted them. Two months later, the case again closed. One month later, Bosse sought to reopen the closed case for a second time. In the motion so requesting, he claimed he filed the first reopen motion so that Ms. Ruiz could present her Sanctions Motions, asserted her motions were granted because he failed to file any opposition, and explained he now sought to reopen to file a motion to vacate the sanctions order. Despite this, however, his "bare-bones motion did not disclose his grounds for vacatur." This time, Ms. Ruiz opposed Bosse's effort, accusing him of misrepresenting the grounds for the first reopening and for failing to demonstrate cause for a second one. As the BC later confirmed during a colloquy with Bosse, Bossee had inaccurately stated the grounds, the BC had granted Ms. Ruiz's sanctions motion due to his non-opposition, and Bosse had failed to explain why he did not oppose the sanctions motion or why he waited months to file his motion to vacate. Accordingly, the BC denied Bosse's motion with prejudice. Bosse timely appealed--and Ms. Ruiz thereafter filed a Rule 8020 motion requesting an award of sanctions against Bosse for filing a frivolous, meritless appeal that Bosse, in keeping with past practice, declined to address with a filed opposition of any kind.
Bosse was the bankruptcy lawyer for the DRs, In June 2009, Bosse filed a joint chapter 13 petition for the married duo, further certifying that he had accepted only $3,500 prepetition for services to the DRs "in contemplation of or in connection with the bankruptcy case" and that no balance was due and owing for such services. The DRs' Statement of Financial Affairs contained the same number, the only payment to have been made in the year preceding the petition date. Eventually, the DRs converted their chapter 13 case to a chapter 7 one. Their chapter 7 case, deemed no-asset, was closed in September 2010 after they had received a discharge. For the next decade, "[t]he case remained dormant." Despite the above representations, Bosse's connection to the DRs pre- and post-dated his bankruptcy work on their behalves. In fact, he had represented the DRs in several state court actions stemming from a secured creditor's prepetition foreclosure on their real property before and during the bankruptcy case, Before the closing of the bankruptcy case, Bosse collected an undisclosed $21,877.15 for his representation of the DRs in these state court actions; eventually, he separately invoiced another $97,127.76 relating to these sundry actions. Regardless, Bosse seemingly continued to represent the DRs after the case's closing. When the DRs refused to pay his separate invoice for $97,127.76, Bosse sued them in state court in 2012. Whether in that year or later, he successfully obtained a $167,152.76 judgment against Ms. Ruiz. Years later, however, Ms. Ruiz struck back by moving to vacate this judgment. In February 2020, the state court granted this motion, having concluded that the BC had exclusive jurisdiction over Bosse's fees. Five months later, Bosse returned to the BC; two months after that, he left when the case closed again; and one month after that, he filed the motion to reopen, his second of the year, whose disposition was the focus of the BAP's decision.
Laura S. Taylor; Robert J. Faris; and Scott H. Gan

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